At an October 21, 2016 Partnership for Quality Care drug pricing forum at the Kaiser Permanent Center for Total Health in Washington, D.C., Dr. Peter Bach, the Director of the Center for Health Policy and Outcomes at Memorial Sloan-Kettering Cancer Center, endorsed the idea of delinkage in connection with his proposals on value-based pricing. In particular, Dr. Bach argued that we should begin to explore delinkage in the orphan drug space.
A transcript of Dr. Bach’s comments on delinkage are available below:
I think the issue of how value-based pricing is applied does marry well to a sort of prize or delinkage model. So, just as background here, there’s a theory, and I think we can argue about exactly what categories of drugs would fit well or not. There’s a theory that we actually wanna actively manipulate the market. We want people to develop things that they wouldn’t naturally develop because we have societal goals, and the classic example of this is orphan drugs. Right, and you’ll hear over and over again, and it’s true, that if you wanna create a drug for 1,000 people, you shouldn’t even get out of bed, unless there’s an incentive there for you, because you’re never gonna kind of make these huge returns that you can make when you make a drug for millions of people. So, we’ve got layers of incentives in place so people go pursue orphan drugs, and the problem with them actually is they’re working too well. There’s many orphan drugs – many drugs have reclassified as orphan – and because the incentives are so strong, and so we’ve had almost, and there’s no constraint on price. In fact, I think I wanna say 80% of the drugs in oncology approved over the last several years are orphans. In fact, a friend of mine who works in the oncology drug office said it’s like a casting call for the musical Annie in there. So, the you know, but this is this delinkage idea would separate all of the investment in marketing from the investment in biomedical science and I think it’s a very intriguing idea, and I’m interested, particularly in the orphan space, and then you would make the prize value-based, and I think it actually would work pretty well. It would take real societal will because you would be writing enormous checks up front, but I actually think that wouldn’t be a bad model.